IFC Pledges $25 Million to Acumen’s Hardest-to-Reach Fund
The International Finance Corporation (IFC) has pledged up to $25 million to Acumen’s Hardest-to-Reach (H2R) Fund. The $200 million fund aims to deliver clean, affordable energy to underserved regions in Sub-Saharan Africa. It also supports global climate goals.
The H2R Fund is divided into three equity tranches: senior, mezzanine, and junior, each worth $60 million. Additionally, there is a $20 million grant facility.IFC’s investment is allocated to the senior tranche, reducing risks for other investors and encouraging additional capital flow. This investment is part of the IFC’s ongoing strategy to foster sustainable development in areas with critical infrastructure needs.
Pay-as-you-go models
Acumen’s H2R Fund focuses on financing off-grid solar companies operating in 16 African countries with low electrification rates. These companies use Pay-as-you-Go (PayGo) models, enabling low-income households to purchase solar home systems through small, incremental payments. This approach is key in regions where traditional grid infrastructure is either too expensive or impractical.
The fund has set ambitious targets, aiming to provide electricity to 72 million people over the next decade while preventing 5 million tonnes of CO2 emissions. To encourage participation, the grant facility incentivizes solar companies to reduce interest rates for end-users by achieving specific key performance indicators, such as reaching first-time electricity users.
One example of the fund’s impact is Yellow Malawi, which recently secured $2 million in investment from the H2R Fund. This funding will allow Yellow Malawi to expand its services, providing solar energy to 182,000 more people.
Acumen, a nonprofit organization specializing in impact investment, has been a leader in the off-grid solar sector. The H2R Fund builds on Acumen’s legacy, using a blended finance model combining commercial investments, concessional capital, and grants. This approach generates both financial and social returns.
By supporting solar companies in underserved regions, the H2R Fund addresses energy poverty and promotes sustainable growth in Sub-Saharan Africa. The IFC’s investment shows its commitment to sustainable development and the power of impact investing to create real change.
With initiatives like Acumen’s H2R Fund, the future of clean energy in Sub-Saharan Africa looks promising, driving lasting social and economic transformation.
